Latin America Fertilizer Demand

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1 Latin America Fertilizer Demand GPCA Douglas Hoadley September 2017

2 Legal Notice This presentation is private and confidential. It must not be disclosed in whole or in part, directly or indirectly or in any other format without the prior written permission of CRU International Limited. CRU International Limited s responsibility is solely to its clients and its liability is limited to the amount of the fees actually paid for professional services. Although reasonable care and diligence has been used in the preparation of this presentation, we do not guarantee the accuracy of any data, assumptions, forecasts or other forward-looking statements. We accept no liability to third parties, howsoever arising. 2

3 Global nitrogen demand million nutrient tonnes of N Latin America accounts for about 8% of global N demand East Asia Europe & CIS South Asia North America Latin America South-East Asia Africa Middle East Oceania Caribbean 3

4 Global phosphate demand million nutrient tonnes of P Latin America accounts for about 18% of global P demand East Asia Europe & CIS Latin America North America South Asia South-East Asia Africa Oceania Middle East 4

5 Latin American fertilizer demand 10 Nutrient demand: million tonnes * 2018* N P 5

6 Key consumers of nitrogen in Latin America 4.5 million nutrient tonnes of N These countries account for 94% of nitrogen demand in Latin America. Brazil is the largest consumer comprising of 50% of total consumption Brazil Mexico Argentina Colombia Venezuela Peru Chile Guatemala Ecuador Uruguay Average

7 Key consumers of phosphates in Latin America million nutrient tonnes of P Phosphate fertilizer demand in Latin America is more concentrated than nitrogen, with Brazil accounting for approximately 75% of total consumption Brazil Argentina Mexico Paraguay Colombia Uruguay Chile Peru Venezuela Ecuador Average

8 Brazil is an agricultural powerhouse Availability of arable land, regular rainfall and suitable climatic conditions. World s largest producer of sugar, the second biggest producer of soybeans. Total fertilizer demand (N, P and K) has grown at approximately 7.1% per annum between A majority of the expansion has occurred in the Cerrado, a vast tropical savannah region in centre-west Brazil covering states such as Goias, Mato Grosso and Mato Grosso do Sul. Crop expansion has been driven by the conversion of pasture lands in the Cerrado from livestock to soybeans and corn. Brazilian fertilizer demand is mainly met through imports 8

9 Brazil fertilizer demand dynamics 16 Nutrient demand: million nutrient tonnes * 2018* N P K 9

10 Brazil major crop area forecast Harvested area, million ha Brazil is forecast to produce record levels of corn and soybean 2017 area: 34.8m ha m ha m ha 2.1m ha Corn Soybeans Wheat Sugar 10

11 Brazil s nitrogen demand by crop N consumption, million tonnes % 13% 14% 29% 27% 25% 27% 31% 31% Corn Sugar F&V Others 11

12 Currently, Brazil is slightly dry which may delay soybean plantings Rainfall Anomaly Dry Wet < >1.6 Sugar production area Corn production area Soybean production area

13 Brazil s Cerrado region is large scale agriculture 13

14 Brazil soybean area by region Harvested area, million ha * North Northeast Centre-West Southeast South 14

15 Brazil soybean and corn area dynamics 40 Harvested area, million ha * Full season corn Safrinha corn Soyabean 15

16 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Urea Barter Ratio Number 60kg corn bags/1 tonne urea 60 LESS favourable for fertilizer sales MORE favourable for fertilizer sales 16

17 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 MAP Barter Ratio Number 60kg soybean bags/1 tonne MAP 35 LESS favourable for fertilizer sales MORE favourable for fertilizer sales 5 17

18 Global Urea Imports million tonnes Latin America accounts for about 24% of global imports Latin America South Asia Europe & CIS South-East Asia North America Middle East Africa Oceania East Asia 18

19 Key importers of urea in Latin America million tonnes These countries account for 96% of nitrogen imports in Latin America. Brazil is the largest consumer comprising 46% of total imports Brazil Mexico Colombia Peru Chile Ecuador Guatemala Argentina Uruguay Honduras 19

20 Middle East Urea exports year-to-date, Brazil largest destination in USA Brazil India Thailand

21 Global DAP and MAP imports million nutrient tonnes of P2O5 Latin America accounts for about 31% of global DAP and MAP imports 0.0 Latin America South Asia Europe & CIS North America Oceania Africa Middle East East Asia South-East Asia 21

22 Key importers of phosphates in Latin America million nutrient tonnes of P2O5 DAP/MAP imports in Latin America are more concentrated than nitrogen, with Brazil accounting for approximately 70% Brazil Argentina Mexico Colombia Uruguay Peru Chile Ecuador Honduras Guatemala 22

23 Conclusions Latin America accounts for 8% of global nitrogen demand and 18% of phosphates demand. Brazil, Argentina, Mexico, Colombia are the largest consumers in the region; Brazil alone accounts for 50% of the region s nitrogen demand and 75% of phosphates. Brazil is a large market with high growth rates as soybeans and corn plantings continue to increase. Most of this region s demand is met by imports and Latin America accounts for 24% of global nitrogen imports and 31% of phosphates imports. The Middle East has shifted some urea exports from the US to Brazil over the last year. 23

Market Outlooks CRU s Market Outlook products each provide a medium-term market analysis service across a range of mining, metals and fertilizer commodity markets.

24 Market Outlooks CRU s Market Outlook products each provide a medium-term market analysis service across a range of mining, metals and fertilizer commodity markets. Subscribers also have access to: An executive summary, including key narratives in graphical form, and scenario analysis as part of the main report A comprehensive, downloadable, global demand, supply, capacity, trade and price data Timely CRU Views on the latest market developments CRU s macroeconomic and exchange rate forecasts from CRU s own in-house team of economists Personal contact with our global team of analysts 24

25 Thank You! 25

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